Tuesday, January 31, 2017

Economics and Germany

Among the forty-odd topics that my university years introduced me to and set me 'on-fire', was the subject of economics.  Sadly, I wish that I had various options listed out for evening classes on economics, but that's one of those topics that you don't find in abundance for night-school.  So over the years, I've gained a great deal of insight and respect for the topic of economics.

Part of my window of observation today....revolves around looking at German economics and it's trends.

For those who aren't aware....Germany has a fairly successful story on the last decade in terms of economics.  German GDP growth is 4th in the world....almost 2-percent in 2016.  Inflation?  .5-percent.  Go look at Iran (near 19-percent) or the Ukraine (11-percent).

Today, Germany covers 90-percent of it's agricultural needs.  Most of what gets imported in....are crops or items which are grown in warmer regions in the fall or winter period.  So you can walk into any German grocery and be shocked in mid-November to find strawberries from Morocco, or grapes from Chile.  Most of the agricultural products that Germany does export?  Sugar beets, barley, and fruit.

Few people realize it, but Germany typically builds five million minimum cars every single year, and this is a major part of the economic success of the nation.  When you go and talk about market sectors across the globe....some business enthusiasts note that Germany has around 1,500 companies that fall into the top-three tier of these hundreds of sectors that exist.  A lot of this business success in manufacturing or production?  It comes from family-owned companies....something that is of a rare nature in the United States....yet still survives in Germany.

What's carried a lot of the growth income over the past decade in Germany?  Tourism.  Around a decade ago, there was this study which looked at the individual German state (16 total), and found that at that time (2008), Bavaria had 42 million hotel nights accounted for, with 17.3 million foreign guests noted over that one-year period.  The national statistics office looked at 2015, and noted across all of Germany....436-million hotel-nights were seen.  They even noted that 79.7 million foreign guests came to spend at least one day in Germany.  The chief draw?  Architecture, historical sites, beer, safety, and an aggressive sales angle.

You can go and view the hundreds of companies now existing in Germany with a technology and 'green' angle.  Journalists put their sales at 200 billion Euro plus now.

So the negative side of this story?

Let's be honest....roughly 15-percent of the German population is classified as below the poverty category, and you can put around an additional 15-percent as the lower-income working-class which is slightly above the poverty line. Some argue where the lines start and end, or how the divisions are worked up, but you've got approximately a third of the nation which isn't thrilled or that enthusiastic about the present economy.  Losing a job today, at age 55 is a big deal because it'll be near impossible to find another job.

German jobs shifting out of the country?  There are certain jobs which can't go beyond the borders....from the service sector, to high-technology, and onto tourism-related jobs.  The EU sat there a couple of years ago and was talking about this idea that you couldn't say a made-in-Germany product unless at least 45-percent of the product was made and assembled there.  There was this odd trend where a lot of parts and assembly were made in the eastern European states, and just shipped off to Germany for the last part of the episode, with cheap German labor as the last step.

German companies that produce TV's today?  Non-existent.

Vodafone used to make a large number of smart-phones in Germany, and one day.....said 'enough'....moving the manufacturing to Romania, for cheaper labor.

If you walk into a typical German department store today and look for German-made clothing....the odds are against you finding such clothing.  Shoes?  Same way.  Upscale shops might still carry the high-grade shoes or clothing. The rest moved on.

Industry-wise, it's a nation that knows it can't compete with China and allows massive import, just like the US.

Worry by the political folks (especially by the SPD, which used to be the pro-worker's political party)?  You'd think that they'd be looking at the votes and be fairly worried.  Nationally, it's a great rate....roughly 5-percent unemployment.  But if you go region by region....especially in NRW....you start to find various areas with 10-to-14 percent unemployment.  Chief cause?  Manufacturing shifted out of the country.  Older guys who get dismissed....simply standing there and waiting for some magic trick to occur by the political folks, who are mostly out of tricks.

Bavaria?  It's a totally different story.  They are actually (Jan 2016 rate) around 4.5 percent unemployed.  If you use just the upper northern-third of Bavaria.....using 2014 numbers....they were fairly close to 2.5-percent.  You just need to hold up your hand, and you'd catch a job within the state.  In most of the EU countries....youth-unemployment is a serious issue....with 20-percent unemployment rates not being that unusual.  In Bavaria, if you scan for youth unemployment....the number is near 2.4-percent....which is an amazing number if you think about the rest of the EU.

The whole last decade in Germany has been a somewhat great success story.  The problem is that roughly a third of the nation see stagnation and no real opportunity existing.  There are the 'haves' and 'have-nots'.  No one from the CDU or SPD parties can stand in the presence of this crowd and say much.  It's this group which can intimidate the parties and the intellectual news players the most.  This public isn't interested in some new program, or some new distribution of additional cash.....they want jobs and a better pay scale.

In a nutshell...as much negativity that exists around the US about the economy that exists.....the same issues exist in Germany.

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